China Carbon Emissions 2023 Rebound: Q2 Sees 10% Surge, Surpassing 2021 Record Levels, Analysis Shows

Rising Emissions: Understanding the Factors

A recent analysis by Carbon Brief has shed light on the surge in China’s carbon emissions during the second quarter of 2023. This increase, driven by two main factors, has implications for China’s environmental efforts and economic recovery.

1.Comparing Recovery Periods: Post-Covid Lockdowns

The first factor contributing to the rise in emissions is a comparison with the same period in 2022. During that time, emissions were notably lower due to the Covid-related lockdowns that had brought major cities, including Shanghai, to a standstill. These restrictions had a significant impact on reducing emissions across the country.

2.Drought’s Impact on Energy Production

The second factor is an ongoing drought adversely affecting China’s large hydropower plants. The reduced water flow has led to a substantial decrease in the output of these plants, impacting the overall energy generation capacity. This decrease in hydropower output has, in turn, pushed China to rely more on other energy sources, potentially leading to higher carbon emissions.

Image depicting China's challenge: Rapid coal power and steel plant growth vs. emission reduction goals. Balancing act for China carbon emissions.

Navigating Forward: Complex Challenges and Opportunities

While the current increase in emissions raises concerns, various factors are at play as China charts its course toward a more sustainable future.

Balancing Economic Recovery and Environmental Goals

China’s economic recovery following the easing of Covid restrictions has been slower than expected. This has raised the possibility of implementing carbon-intensive stimulus measures to expedite economic growth. Striking a balance between economic revival and emission reduction goals presents a complex challenge for policymakers.

Coal Expansion and Low-Carbon Investments

China’s ongoing expansion of coal power construction, coupled with substantial investments in coal-based steel production, indicates a mixed approach to energy infrastructure. These developments will be completed within the “15th five-year plan” period (2026-2030), during which China has committed to reducing coal consumption. On the positive side, China’s significant investments in low-carbon energy sources offer a promising trajectory. If these investments align with projections, they could offset emissions growth and even set China on a path to reaching emission peaks within two years.

In summary, the intricate interplay of recovery strategies, energy choices, and environmental commitments is shaping China’s trajectory in carbon emissions. As the nation faces these challenges, a strategic balance between economic growth and sustainable practices remains critical for China’s policymakers.

China’s Carbon Emissions in 2023: What You Need to Know

Despite the emission increase, there’s some positive news. China has invested heavily in low-carbon energy sources like solar and wind power. The amount of clean energy added this year is expected to match the growth in electricity demand, which is a promising step toward reducing emissions.

Emissions would have stabilized if we removed the effects of the short-term variation in hydropower output and the rebound in oil consumption after the “zero-Covid” period. This indicates that the increase in emissions is mainly due to temporary factors rather than long-term structural issues.

Challenges and Future Direction

The revival of oil consumption after Covid-19 controls were lifted was lower than expected, but other parts of the economy, like economic recovery, have been slower. This has raised concerns about a potential increase in carbon-intensive activities to stimulate economic growth.

Additionally, China’s continued construction of coal power plants and coal-based steel capacity is a cause for concern. The current building pace suggests that a significant amount of coal-based infrastructure will be completed after 2025, just when China aims to start reducing its coal consumption.

While China’s carbon emissions have risen in 2023, it’s essential to understand the factors at play. Temporary influences, such as the Covid-19 rebound and hydropower challenges, are significant contributors. However, China’s push towards clean energy investment is a positive sign, despite challenges to overcome. The nation’s efforts to balance economic growth with environmental responsibility will play a crucial role in shaping its emission trajectory in the years to come.

China’s Carbon Emissions Rebound: What’s Behind the Increase?

In the second quarter of 2023, China’s carbon dioxide (CO2) emissions significantly jumped, with coal power and transportation leading the way. Let’s break down what happened:

Coal Power Generation Rises: Coal-fired power generation saw a notable 15% increase during this quarter. This means more electricity was produced using coal, significantly contributing to carbon emissions.

Higher Oil Consumption: Oil consumption also went up by 18%. This means more oil was used for transportation, including cars, trucks, and other vehicles. Burning oil releases CO2 into the atmosphere, adding to the overall emissions.

Steel Production Slows Down: Steel production had a brief surge earlier in the year but slowed down in June. This is significant because steel production contributes to CO2 emissions. When steel production increases, so do emissions, and when it slows down, emissions can be reduced.

Cement Production Decreases: Cement production, which is used in construction, started to fall. This is because there was less demand for construction materials due to decreased real-estate projects. Cement production is another source of CO2 emissions, so decreasing its production can help reduce overall emissions.

Why These Increases Matter: After the power sector, China’s most significant contributors to CO2 emissions are the coal and steel industries. The pandemic led to economic policies favoring construction and heavy industry, so coal and cement production increased. This pushed emissions higher than the levels seen before the pandemic.

Natural Gas Plateaus: Fossil gas, like natural gas, has remained steady since late 2021. This is because global gas prices increased, and there were concerns about energy security due to geopolitical issues. As a result, policies discouraged a shift from coal to gas, and investments were made in new coal plants.

These factors combined to drive China’s carbon emissions upward. It’s important to understand these trends to make informed decisions about addressing and reducing carbon emissions in the future.

Understanding China’s Changing Energy Landscape

China’s recent rebound in carbon emissions during the second quarter of 2023 has been primarily driven by the growth in oil consumption, particularly diesel. Interestingly, this resurgence owes more to freight and public transport than personal vehicles. While petrol consumption, an indicator of private cars and light vehicle transport, is rising again, it has not yet fully recovered to its pre-pandemic levels. Notably, the rising adoption of electric vehicles (EVs) is beginning to influence petrol demand significantly.

The Influence of Electric Vehicles

The adoption of EVs, including plug-in hybrids, has seen a remarkable increase, constituting 28% of all vehicle sales in the first half of 2023, up from 22% in 2022 and a mere 4% in 2020. Consequently, the proportion of EVs among all vehicles sold in the last decade has risen from 4.5% a year ago to 7.5% by June 2023. This shift has likely reduced petrol demand growth by about three percentage points. This transition to EVs has not only started to decrease carbon emissions in China but has also showcased the potential for lower emissions over the lifespan of these vehicles, estimated to be around 40% less than traditional gasoline-fueled cars, with this difference projected to widen as cleaner energy sources power these vehicles.

Impact of Changing Weather Patterns

The surge in coal power generation, often associated with increased carbon emissions, is not solely due to a surge in demand for electricity. The decline influenced the rise in coal power output in hydropower generation, hampered by a prolonged drought starting in the third quarter of 2022 and continued low rainfall. Conversely, hydropower production had reached record levels in the previous year’s second quarter, skewing year-on-year comparisons.

This year’s reduction in hydropower output results from both weak rainfall patterns and hydropower operators’ strategic conservation of water in reservoirs to meet peak demand during the summer season. Unlike the previous year, when hydropower plants generated power without much consideration for potential shortages, this year’s water-saving approach indicates a shift from economic incentives to administrative directives to ensure a stable power supply.

Meeting Energy Demand: A Complex Balancing Act

The increase in power generation from thermal plants using fossil fuels or biomass is a short-term response to compensate for the drop in non-fossil power generation. Non-fossil power plants are generally more cost-effective, leading to nearly constant output. Consequently, there needs to be more capacity to increase power generation from non-fossil sources without introducing new infrastructure, a time-consuming process. As some media reports have suggested, the rise in coal consumption to fill the hydropower gap should not be misconstrued as a long-term shift in China’s energy mix.

China’s Growing Low-Carbon Energy Sector

China’s transition to low-carbon energy sources is making impressive strides, with significant additions to its energy grid. In the first half of 2023, China incorporated 78GW of solar energy, 23GW of wind energy, 1.2GW of nuclear power, and 5GW of hydropower. The growth in solar and wind installations, increasing by 150% and 80%, respectively, is particularly noteworthy. To put it into perspective, the solar power installed in just six months is equivalent to Germany’s total solar power capacity.

While some of the surge in solar installations can be attributed to delayed projects from pandemic-related disruptions, maintaining these installation levels is crucial to meeting local government targets. This increase in low-carbon energy capacity is substantial enough to cover electricity demand growth of up to 4% per year. However, recent discussions among regulators suggest concerns about the rapid growth, particularly regarding grid integration challenges and potential downsides for the industry. Despite these considerations, China’s commitment to climate goals underscores the importance of sustained investment in low-carbon energy sources.

China’s energy landscape is rapidly evolving, with significant progress in adopting electric vehicles and expanding its low-carbon energy sector. Balancing various factors, from changing weather patterns to grid integration challenges, remains a complex endeavor, but the nation’s commitment to curbing carbon emissions and embracing cleaner energy sources remains resolute.

Rapid Expansion of Coal Power and Steel Plants Continues

Amid ongoing concerns about electricity supply, China’s push for new coal power and steel plants remains strong. Greenpeace research reveals that the approval of new coal power projects has maintained its rapid pace into 2023, with a staggering 50GW of new projects getting the green light in the first half of the year.

Unmatched Peak Load Needs Fueling Unnecessary Growth

The surge in coal power projects, initially triggered by worries about meeting peak electricity demands during summers, has now spread across regions where additional power generation isn’t required. A comparison of reported peak loads and available dispatchable capacity highlights the disconnect between demand and supply.

Steel Industry Invests Heavily in Carbon-Intensive Capacity

China’s steel industry, a significant emitter of carbon emissions, continues to invest in new coal-based capacity. In the first half of 2023, plans were announced for blast furnace projects with the ability to produce a substantial 26 million tonnes per annum of blast furnaces and 15 million tonnes per annum of basic oxygen furnaces. This scale of investment raises concerns, as around 40% of China’s production capacity is set to be replaced with new plants by 2025.

Government Support and Policy Tension

The central government actively supports the expansion of coal power plants, emphasizing the need for “supportive power sources” to ensure a reliable electricity supply. However, this growth contradicts China’s commitment to reducing coal consumption by 2025. To address this tension, new policies have been introduced to curb coal-to-chemicals projects and prioritize coal supply for power and heat over the coal-to-chemicals industry.

Balancing Act for China’s Emission Targets

China’s rapid expansion of carbon-intensive industries, driven by economic and political considerations, poses risks to its emission reduction goals. There’s a potential for pushback against efforts to promote low-carbon energy sources and a danger that policies favoring energy-intensive infrastructure could emerge. China needs to align investments and policies with its ambitious goals to meet emission-peaking targets in the next two years.

Navigating a Complex Path Forward

The rush to develop new coal power and steel plants in China raises crucial questions about sustainability, emissions targets, and economic growth. Striking a balance between energy demand, carbon reduction, and financial priorities remains challenging, and policymakers face critical decisions to steer the country toward a more environmentally responsible and economically viable future.